European renewable energy developments have so far focussed on electricity generation, with relatively modest progress in renewable heating. Partly this is due to the temporal mismatch between solar irradiation availability and residential heating demand profiles. Seasonal thermal energy storage (STES) has been proven in several pilot projects and is market ready, albeit not currently economical. This paper sets out to assess the potential contribution of STES to increasing the renewable heating fraction in residential buildings. An existing mixed integer linear program (MILP) is extended to consider STES and applied to optimize the energy supply system for a typical residential district with efficient new-build apartment buildings, in the context of five contrasting scenarios. Achieving 100% renewable heat supply requires significant capacities of seasonal storages and is associated with substantially (14%) higher cost than in the reference scenario. To achieve a 60% renewable heat supply fraction under today's framework conditions, the cost increase compared to the reference scenario is only marginal (1%). The results in three future scenarios reflecting possible conditions in 2030 demonstrate that even higher levels of renewable heat supply could soon become economical. Overall the recommendation is to aim for renewable heat supply levels of around 60-80% combined with demand side measures such as improved insulation. Further work should focus on more systematically exploring the relationship between the grid renewable electricity fraction, available solar collector area and the optimal renewable heat integration strategy. (C) 2019 Elsevier B.V. An rights reserved.